Today the United States Department of the Treasury Office of Foreign Assets Control (“OFAC”) announced the designation of two private North Korean individuals and two North Korean linked entities pursuant to Executive Order 13382. These parties’ names now appear on the List of Specially Designated Nationals and Blocked Persons (SDN List) The move was cited as part of an ongoing effort to disrupt North Korean efforts at procuring ballistic missile and weapons of mass destruction (WMD). Daedong Credit Bank (DCB), together with DCB Finance Limited—a DCB front company—and DCB’s representative Kim Chol Sam were designated pursuant to Executive Order (E.O.) 13382. In addition, the other individual designated, Son Mun San, is the External Affairs Bureau Chief of North Korea’s General Bureau of Atomic Energy (GBAE). The financial operations carried out by DCB, DCB Finance Limited, and Kim Chol Sam are responsible for managing millions of dollars of transactions in support of the North Korean regime’s destabilizing activities.

Those seeking to contest their designations can pursue such reconsideration through the administrative process. Please click here for more information on contesting an OFAC designation. The identifying information on these designations is contained below:

Today the United States Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) designated eighteen (18) individuals and fifteen (15) entities linked to Rafael Caro Quintero, an alleged Mexican drug trafficker. According to the Treasury Press Release, Rafael Caro Quintero is believed to have been involved in criminal activity since the late 1970s when he and others, including Juan Jose Esparragoza Moreno (a.k.a. “El Azul”), are believed to have formed the Guadalajara drug cartel and amassed an illicit fortune. According to OFAC, Caro Quintero was behind the kidnapping and murder of Drug Enforcement Administration (DEA) Special Agent (SA) Enrique Camarena in 1985. Caro Quintero was convicted in Mexico for his involvement in SA Camarena’s murder and drug trafficking and is currently serving a 40 year prison sentence there.

OFAC designations can be damaging, but there is recourse. For more information on how to contest an OFAC SDN designation as a Foreign Narcotics Trafficking Kingpin (SDNTK), or any other type of designation, please read our page on OFAC SDN Removal.

Today, the United States Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated Abd al-Hamid Al-Masli pursuant to Executive Order 13224. Treasury cites Al-Masli as being a bomb maker for Al-Qaeda and acting as the leader of an Al Qaeda electronics and explosives workshop in Pakistan, which is responsible for producing IED components for Al Qaeda senior leadership. As a result of today’s action, any property in the United States or in the possession or control of U.S. persons in which ‘Abd-al-Hamid al-Masli has an interest is blocked, and U.S. persons are generally prohibited from engaging in transactions with him. Al-Masli has a right to request a reconsideration of his designation through OFAC’s administrative reconsideration process outlined at 31 CFR 501.807.

Last week, the United States Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced that it was releasing Elaf Islamic Bank (Elaf) from the Part 561 List. The Part 561 List targets those foreign financial institutions facilitating certain significant financial institutions on behalf of certain Iranian financial institutions by barring their ability to establish and maintain correspondent banking relationships with the U.S. The name comes from Part 561 of Title 31 of the Code of Federal Regulations which contains the Iranian Financial Sanctions Regulations (IFSR), a set of regulations promulgated pursuant to the Comprehensive Iran Sanctions Accountability, Divestment Act of 2010. Prior to Elaf’s removal, it was one of two banks on the Part 561 List, the other being Kunlun Bank.

In their press release concerning Elaf’s removal, Treasury cited the fact that Elaf undertook a number of steps which led to their removal, which by OFAC standards occurred very rapidly. First, Elaf engaged Treasury immediately upon their designation. Second, Elaf appropriately identified the basis of their designation, the provision of significant financial transactions for Export Development Bank of Iran (EDBI), and took steps to terminate that relationship. Those steps included freezing EDBI’s accounts, and reducing their overall exposure to the Iranian financial sector. As I have noted previously, speed, accurate identification of the basis of the designation, and addressing that basis, are the keys to being removed from the OFAC Specially Designated Nationals and Blocked Persons List (SDN List). It appears the same holds true for the Part 561 List, which follows the same administrative removal process as the SDN List.

Treasury’s actions demonstrate once again that removal of an OFAC designation is possible if addressed in the appropriate manner. Foreign financial institutions still dealing with Iran may want to pay heed to the actions of Elaf. The U.S. Congress and many pro sanctions groups in Washington are pushing for more aggressive enforcement and implementation of the types of sanctions that Elaf faced. If they get their way, a number of foreign financial institutions may find themselves having to follow the model Elaf set forth for removal from the Part 561 List or from the OFAC SDN List itself.

The author of this blog is Erich Ferrari, an attorney specializing in OFAC matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrariassociatespc.com.

Yesterday, the United States Departments of State and of the Treasury designated a number of Iranian individuals and entities pursuant to Executive Order (E.O.) 13382. E.O. 13382 targets those parties involved in Iran’s proliferation of weapons of mass destruction activities. Once designated pursuant to this authority, any assets owned or controlled by the designated parties under U.S. jurisdiction are blocked. Moreover, U.S. persons are prohibited from engaging in most transactions with the designated parties. Under E.O. 13382, both the Treasury Department and the State Department have the authority to designate parties for sanctions. Treasury’s designations are administered through the Office of Foreign Assets Control (“OFAC”) who also maintain the list of Specially Designated Nationals and Blocked Persons (SDN List) in which these designated parties names will now appear.

OFAC designated the following individuals and entities: Fereidoun Abbasi-Davani, Morteza Ahmadali Behzad, Seyed Jaber Safdari, Aria Nikan Marine Industry, Iran Pooya, and Pouya Control (Tejarat Gostar Nikan Iranian Company). The State Department added the following designations: Amir Hossein Rahimyar, Mohammad Reza Rezvanianzadeh, Faratech, Neda Industrial Group, Tarh O Palayesh, and Towlid Abzar Boreshi Iran. All of these entities are alleged to have engaged in activities to further Iran’s nuclear proliferation efforts. In addition, these individuals and entities have also had designations under the Iranian Financial Sanctions Regulations placed upon them. This indicates that those foreign financial institutions who deal with these individuals and entities could be subject to secondary sanctions under the Comprehensive Iran Sanctions, Accountability and Divestment Act of 2010 (CISADA).

These individuals do have some recourse under OFAC’s regulations to contest their designation. There is an administrative reconsideration process that can be engaged in with the agency, however, it is often a long and burdensome process involving the production of significant documents and information to OFAC in order to prove that their evidentiary basis for making the designation is flawed. This is a task that becomes even more difficult because OFAC rarely provides any of the information that forms the basis of their designation, leaving the designated party to guess what OFAC’s basis is and to try to provide arguments and evidence to counter that. That said, designations do occur regularly and if any of these blocked parties believe they have been wrongly designated they should pursue such reconsideration.

The author of this blog is Erich Ferrari, an attorney specializing in OFAC matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrariassociatespc.com.

Last Friday, the United States Department of the Treasury’s Office of Foreign Assets Control (OFAC) placed two individuals, Hamad El Khairy and Ahmed El Tilemsi, from Mali and one entity in Mali, Movement for Unity and Jihad in West Africa (MUJWA) on the Specially Designated Nationals and Blocked Persons List (“SDN List”) under the authority of Executive Order (E.O) 13224. The targeting of these parties was actually directed by the U.S. Department of State, who also have authority to utilize sanctions under E.O. 13224. E.O. 13224 was issued shortly after September 11, 2001, in an effort to give the U.S. additional authorities under which to apply economic sanctions to parties engaged in international terrorism and those providing material support to those engaged in such activities. As a result of these designations, U.S. persons can no longer engage in any transactions with the designated parties and any assets under U.S. jurisdiction belonging to those parties are to be blocked.

In addition to their E.O. 13224 designation, MUJWA is also listed by the United Nations 1267/1989 al-Qa’ida Sanctions Committee. As part of their UN listing all member states are ordered to implement assets freezes, travel bans, and arms embargoes against MUJWA. When effectively implemented UN sanctions can be extremely effective, much more so than unilateral sanctions such as the one imposed by the U.S. In addition, UN sanctions may procedurally be more sound than the U.S. sanctions regime, as those designated under UN sanctions have recourse to challenge their designation through submission of the case to an independent Ombudsman who reviews the cases to determine whether or not the designation was made in error or whether the circumstances had changed to such a degree that the designation was no longer warranted. At a meeting last week in New York, it was confirmed that in the overwhelmingly majority of cases reviewed by the Ombudsman that the recommendation was ultimately made to remove the designated party from the sanctions list.

OFAC also allows for reconsideration of the designations made to the Specially Designated Nationals and Blocked Persons List (SDN List), whether they be made by Treasury or State. However, in that process there is no independent arbiter to review the designation, the review is often carried out by the very same officials that placed the party on the list in the first place. In addition, OFAC is under no mandated timeline to process the reconsideration, and I personally have worked on cases where the reconsideration has been pending for nearly eight years. Finally, OFAC will also turn over very little, if any evidence, serving as the basis of the designation, opting instead to engage in back and forth communications with the designated party where OFAC requests additional information and the designated party supplies such information. Once OFAC is satisfied with the information it has received it makes its decision as to whether to rescind the designation.

Despite the problems with the OFAC SDN reconsideration process, parties are frequently removed from the list. As such, any party seeking to have such a designation reconsidered should engage with OFAC as soon as possible and begin the steps towards removing their designation.

The author of this blog is Erich Ferrari, an attorney specializing in OFAC matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrariassociatespc.com.

The hawala operation, Rahat Ltd., has branches in Afghanistan, Pakistan, and Iran which OFAC states have been used by the Taliban to facilitate their illicit financial activities. OFAC also designated the owner of Rahat Ltd, Mohammed Qasim, and the owner and manager of its Quetta, Pakistan branch, Musa Kalim. OFAC believes the hawala operation has been involved in providing financial services to the Taliban’s shadow governor for Helmand Province Barich. Allegedly, these services are used to pay other Taliban commanders to carry out operations in Southern Afghanistan as well and last year $500,000 of Taliban money was deposited in Rahat’s Quetta, Pakistan branch, while hundreds of thousands of dollars in Taliban accounts flowed through Rahat.

The other set of designations targeted five individuals and three entities in Tijuana, Mexico. These parties are alleged to have been involved in the Sinaloa Cartel’s methamphetamine production by providing the Cartel with precursor chemicals needed for meth production.

As is the case with almost all OFAC designations on the Specially Designated Nationals and Blocked Persons List (“SDN List”), any assets falling under U.S. jurisdiction belonging to these parties will be blocked and U.S. persons are prohibited from engaging in transactions with such designated parties.

All of these designations can be challenged under 31 C.F.R. 501.807, the Treasury regulation which outlines the administrative reconsideration process of SDN listings. To effectively challenge a designation under that regulation, the party designated must submit evidence and arguments to show either a case of mistaken identity in the designation, or a change of circumstances sufficient to warrant a delisting. Although, I have assisted a number of parties in being removed from the list, it is often a difficult task and requires a tremendous amount of patience. If any of those parties targeted today wish to seek a reconsideration, they have likely have a long road ahead of them.

The author of this blog is Erich Ferrari, an attorney specializing in OFAC matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.